Thursday, November 23, 2023
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Pakistan requests Saudi-based IsDB for additional oil financing, waiver of service charges

Pakistan is negotiating with IsDB to jack up oil facility from $50 million to $100 million for December 2023

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. — Reuters/File
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. — Reuters/File

  • Pakistan asking IsDB to jack up oil facility from $50m to $100m.
  • IsDB has proposed services charges of less than 1%.
  • It is yet to be seen how Pakistan’s request would be entertained.


ISLAMABAD: The Islamic Development Bank (IsDB) has proposed enhanced service charges on Pakistan’s request for an additional oil financing facility but Islamabad has requested the lender to give a waiver, reported The News on Thursday.

Officials of the Prime Minister’s Secretariat told The News that after striking the staff-level agreement with the International Monetary Fund (IMF), Pakistan is negotiating with the Jeddah-based lender to jack up the oil facility from $50 million to $100 million for the end of December 2023. They are also discussing the possibility of reducing the level of service charges imposed on this facility.

“IsDB has proposed services charges of less than 1% on the committed oil facility but we made a request to grant us a waiver or reduce it,” an official told the publication.

The term sheet shows that the service charges are around 0.05% to 0.5%. The IsDB had already provided $100 million in September 2023 for oil financing and has indicated that it may provide a $50 million facility till the end of December.

It is yet to be seen how Pakistan’s request will be entertained by the IsDB management and its board when it meets on December 11.

The IsDB’s Executive Board is also set to meet next month to approve syndicate financing of $300 million.

With the signing of SLA with the IMF, all other multilateral creditors including the World Bank, Asian Infrastructure Investment Bank (AIIB) and Asian Development Bank (ADB) have responded positively and shown an inclination to resume programme loans.

As per The News, the three multilateral institutions are ready to give approval for programme loans in December 2023.

The ADB board is expected to hold a meeting on December 4 in Manila to consider the Domestic Resource Mobilization (DRM) programme loan of $350 million for Pakistan.

The WB is expected to grant approval to RISE-II on December 20 while the AIIB is going to consider approval of $250 million on December 21 just a few days before the start of the Christmas and new year holidays.

The IMF’s Executive Board date has not yet been confirmed or communicated when it would meet to grant approval for Pakistan’s next tranche. It might be held either on December 7 or December 13 or 14.

However, it is likely that the IMF’s Executive Board may grant approval for $700 million tranche before the Christmas holidays.

If everything gets materialised, then Islamabad is expecting a disbursement of $1.7 to $1.8 billion during December.

Out of the total gross financing requirement of $25 billion, Pakistan has so far materialised $5 billion from all multilateral and bilateral creditors in the shape of disbursements of loans and time deposits. 

The EXIM Bank of China also granted a rollover of $1.2 billion so far for the current fiscal year.

Pakistan has also made a fresh request to credit rating agencies to review their ratings after approval of the next tranche from the IMF next month.